There is a word in South Africa, ubuntu, which means togetherness. It refers to how all our actions have an impact on others and on society, and highlights the need for all to fight for the greater good. The Montreal Protocol, signed in 1978, is a great example of coming together for better results. This international agreement, to limit the use of ozone-depleting gases in the atmosphere, has been a great success; the Earth’s ozone layer is on track to recover within four decades.

The Dubai Pledge, which was signed by 50 oil companies at the COP28 summit, is a very recent example of coming together. The pledge focuses on the global quest to deliver on the emission reduction ambitions outlined in the Paris Agreement – committing to net zero, setting shorter term targets, monitoring progress, and cutting methane emissions. “Methane emissions from venting, fugitives and flaring comprise around 2 Gt of carbon dioxide equivalent a year (CO2e) – almost half the oil and gas industry’s total Scope 1 and 2 emissions,” according to the Oil & Gas Climate Initiative (OGCI). “While methane is a more potent greenhouse gas than carbon dioxide (CO2), it can be tackled more quickly and cost effectively than CO2. Methane is also shorter lived, so reductions have a faster impact on the climate.”  

In addition to company efforts, government policies will be a key factor in how and how fast the energy transition will move forward, albeit with clear differences from country to country. At the same time, government policies are liable to change in 2024, which is poised to be a pivotal election year – not only in the US but in every corner of the world. Voters in more than 70 countries will be heading to the polls, representing close to half of the global population. The result of these elections will have enormous consequences for many years to come. With 2030 as the first real milestone year in taking stock on the road to reaching net zero, the outcome of the 2024 elections will be a key factor in determining what the 2030 landscape will look like.

Many nations have adopted policies to support the growth of renewable energy. The focus on energy security and on reducing imports has been an important catalyst for this shift. Renewable capacity was expanded at a record pace in 2023, with solar power leading the charge. Solar PV needed to grow by 220 GW to track at the 1.6-degree scenario for global warming. The latest data indicates that the final tally for the year could actually surpass 400 GW! And this is no fluke: there is now supply chain visibility for an annual delivery of 1,500 GW per year. Increasingly clean energy will be the least expensive option moving forward, explaining the impressive speed and scope of the growth. Fossil fuels will, however, continue to play a role and require significant investments for many years to come since natural decline in oil and gas wells is faster than in any demand decline scenarios. That’s why measures to reduce CO2 emissions also from within the fossil fuel supply chains are important. 

According to the World Economic Forum, which met in Davos last week, there are five top energy transition priority measures, all reinforcing the role and importance of governments and the need for collaboration, with one of them being the need for stable policies and regimes. This again points to the importance of effective policies.

For the most recent updates on the likely consequences of the Dubai Pledge, along with the role of gas and LNG in the energy transition and high-level energy market updates, please be sure to sign up and connect to the January edition of Rystad Talks Energy, to be broadcast on 25 January. We are honored to be joined by the CEO of PTTEP, Montri Rawanchaikul, and Bjørn Otto Sverdrup, Chair of the OGCI’s Executive Committee.